The Income Tax Department has granted condonation of delay for charitable trusts to file Form 10AB for seeking fresh approval under Section 80G of the Income Tax Act. According to the latest circular dated 2 July 2026, this relief comes after the deadline to apply for fresh approval expired on 30 September 2025, with all applications made by trusts being rejected solely on the ground of delay. The jurisdictional principal commissioner of income tax is now authorised to dispose of such applications and pass an order before 31 December 2026.
The Income Tax Department has intensified its review of charitable trusts and non-profit organisations, seeking granular details on utilisation of funds, governance practices and charitable activities after detecting discrepancies in declarations to different regulators. The department has sent queries to hundreds of trusts seeking renewal of registration and continuation of tax exemptions. The majority of queries have been directed at trusts receiving foreign contributions to ensure funds have been used exclusively for approved charitable purposes, for which tax exemption is claimed.
The queries include project-wise utilisation of donations, reconciliation of receipts with audited financial statements, utilisation certificates, trustee approvals, payments to related parties and documentary evidence demonstrating that the income has been used only for approved charitable purposes. As reported by The Economic Times, the move is part of a data-driven exercise, under which queries were sent after the trusts were found to have furnished different information in their filings with other regulators than in their income tax returns. A senior official explained that queries are raised only in cases where the system flags any inconsistency and there are variations in tax filing and filings with different regulators.
The exercise comes as the home ministry has tightened the compliance framework under the Foreign Contribution (Regulation) Rules, which require entities receiving foreign contributions to furnish more detailed disclosures and adhere to stricter timelines. According to The Economic Times, while the FCRA amendments do not alter the Income-tax Act, they will significantly enhance the data trail available with tax authorities over time to detect any deviation from the existing compliance under tax law and in claiming exemptions. An official noted that the FCRA amendments do not create any new tax liability, but additional disclosure under FCRA will certainly improve the quality of information available for tax assessment.
Taxpayers can claim deductions under Section 80G only for donations made to trusts which have a valid 80G approval. After receiving donations, a trust typically issues a certificate to the donor acknowledging the receipt, which is used to claim deductions under Section 80G. When a trust already has a valid 80G approval for five years, it must apply for renewal in Form 10AB six months before the approval expires. Chirag Chauhan, founder of CA Chauhan & Company, explained that these registrations used to be valid perpetually, but all trusts were asked to seek approvals every five years. The relief circular specifically targets trusts that missed the deadline for which this circular has come to rescue.
